by Gary Strauss, Marisol Bello and Wendy Koch, USA TODAY

by Gary Strauss, Marisol Bello and Wendy Koch, USA TODAY

A five-day water ban affecting 300,000 West Virginians began lifting Monday, and state officials were optimistic that nine counties could soon return to normalcy. But the chemical company responsible for the Elk River toxic spill is likely to remain mired in lawsuits, state and federal investigations and a prolonged shutdown.

Freedom Industries has been in hunker-down mode since Friday night, when company co-founder Gary Southern gave a brief press conference, dodging questions about the company's monitoring and preventive measures in the 7,500-gallon spill of 4-methylcyclohexane methanol (MCHM), a coal-cleaning agent that can cause skin irritation, vomiting and diarrhea.

So far, Freedom Industries has been hit with a dozen class-action lawsuits from residents and businesses seeking damages, as well as probes by the U.S. Attorney's office and the federal Chemical Safety Board.

The company, initially launched in the mid-1980s, formed under a new entity in December when it merged with Etowah River Terminal, which operated the site, a former oil and gas terminal owned by Pennzoil-Quaker State. Other Freedom partners include chemical processor Poca Blending and Crete Technologies, a Delaware limited partnership, according to reports by the Charleston Gazette and the Wall Street Journal. The companies share many of the same executives, while Southern has ties to five Florida-based mining and chemical companies, the Journal reported.

Calls to Freedom Industries were directed to a woman named "Madeline,'' who provided no information or access to company executives and declined to identify herself or her affiliation. She apparently replaced Freedom's public relations firm, Ryan Associates, which dropped its client over the weekend.

A Freedom co-founder, Carl Lemley Kennedy II, filed for bankruptcy in 2005 and pleaded guilty to tax evasion and withholding more than $1 million from employee paychecks intended to cover federal taxes. He was sentenced to three years imprisonment, later reduced, for helping authorities in a drug sting. He also was convicted in 1987 for selling more nearly two-thirds of a pound of cocaine, the Gazette reported.

"There are some edgy characters tied to Freedom Industries,'' Charleston Mayor Danny Jones tells USA TODAY. "I'm not impressed with them. I believe civilly and criminally, there's a case to be made. They're going to be the target of a criminal investigation and (civil) lawsuits. Those folks are going to circle the wagons."

Lisa Evans, a senior administrative counsel on waste issues for environmental group Earthjustice, suggests that the newly merged company may have been organized to limit financial liability. Evans says it's common for mining, chemicals and energy operators to create smaller subsidiaries with limited funding to control plants or mines. That allows subsidiaries to absorb any risks. But often, she says, the subsidiary does not have the funding to pay for a cleanup in the event of an accident or spill, so it goes bankrupt, and states are left to handle the mess.

The leaked chemical came from a 35,000-gallon above-ground storage tank that isn't subject to inspection. Still, Randy Huffman, who oversees West Virginia's Department of Environmental Protection, says the state - with an economy that's heavily dependent on the coal and chemicals industries - might toughen oversight to prevent future mishaps.

"I think that the loophole that this facility fell into is because it was not a hazardous material, it flew under the radar," Huffman says.

Ken Carper, an attorney and president of the Kanawha County Commission, says Freedom's handling of the leak and its lack of followup since Friday is "bizarre."

"I hope they never open again,'' Carper says in an interview with USA TODAY. Carper says his county - where 100,000 residents have been without water - isn't equipped to regulate chemical plants. The plant's location, about a 1.5 miles upriver from the pipes that take in water for the public's supply, is too close to prevent the impact of a spill.

"There has to be some sort of legislation, which I would support, to keep facilities farther away from the water supply," he says.

Neither the U.S. Environmental Protection Agency nor the state DEP sent inspectors before the spill, agency officials say.

Because the site only stored and did not manufacture chemicals, it did not need permits to discharge pollutants into the air or water. It was not cited for any environmental violations, according to a federally run database. West Virginia officials last visited the property in 1991.

The Occupational Safety and Health Administration scheduled an inspection in 2009, but canceled it after realizing the company did not fall under any of its special emphasis programs, OSHA spokesman Jesse Lawder says.

Although regulators never visited, it appears company officials were aware of issues with a containment dike. Southern told state regulators that $1 million was put into an escrow account to repair the wall, says Mike Dorsey, director of West Virginia's Department of Environmental Protection Emergency Response and Homeland Security.

"The wall is an old cement block wall, and there's some problems with the mortar in a couple places," Dorsey says. "And it came out through that."

Environmentalists applaud tougher restrictions.

Bill Price, a Sierra Club organizer in West Virginia, said a paucity of regulations leaves many unanswered questions about MCHM, its use and how it's stored. The state's agencies are ill-prepared to deal with leaks such as Freedom Industries' and aren't adequately inspecting and enforcing existing regulations, he says.

Heather White, executive director of the Environmental Working Group, said the Elk River spill underscores the nation's lax chemical safety laws.

"It highlights how this nation's entire chemical safety regime is broken from top to bottom, from the time chemicals come on the market with little to no testing, right through the entire life cycle of the substance," White said. "Chemical safety laws intended to protect us are instead giving priority to the interests of chemical companies and manufacturers The real surprise is that disasters like this don't happen more often."